Compass Diversified Q4 FY2024 earnings call

• Strategic M&A activity in 2024: Acquired Honey Pot (disruptive feminine hygiene business), Altor acquired Lifoam (temperature-controlled packaging), divested Ergobaby and Crosman airgun business. - Raised over $115 million in preferred equity in 2024 to deleverage balance sheet. - Bought back over 400,000 shares of CODI common stock in Q4 2024. - Revised management services agreement with sliding scale for base fees, incentive fee, etc. - Emerging centers of excellence in internal audit, financial controls, sustainability, AI, and business automation.

For the full year 2024, the consumer vertical saw pro forma revenues grow double digits, and pro forma adjusted EBITDA increased by greater than 27% versus prior year, excluding a ~$12 million inventory write-down at 5.11. Lugano had annual sales growth of more than 50% and delivered adjusted EBITDA of $195 million in 2024. BOA had more than 20% growth in revenue and greater than 30% growth in adjusted EBITDA for the full year. Industrial businesses had flat sales and a modest decline in adjusted EBITDA in 2024, but improved in Q4 with the acquisition of Lifoam.

• Consolidated subsidiary adjusted EBITDA expected between $570 million and $610 million in 2025. - Branded consumer vertical adjusted EBITDA expected between $440 million and $465 million. - Industrial vertical adjusted EBITDA expected between $130 million and $145 million. - Consolidated adjusted EBITDA expected between $480 million and $520 million. - Adjusted earnings expected between $170 million and $190 million. - CapEx expected between $80 million to $90 million in 2025.

• Geopolitical uncertainty, including tariffs and potential trade wars. - Supply chain disruptions, labor disruptions, inflation. - Difficulties in integrating acquired businesses. - Impact of natural disasters, social and civil unrest. - Changing interest rates.

Q: Larry Solow asked about guidance and Lugano's impact on branded growth.

A: Elias Sabo said Lugano is funding growth and some growth comes from Lugano but also other companies.

Q: Larry Solow asked about 5.11's initiatives beyond PFAS.

A: Pat Maciariello said reinvigorating DTC brand marketing, brand refresh, and new products in Q3.

Q: Lance Vitanza asked about tariffs and M&A environment.

A: Patrick Maciariello said strategic diversification of supply chains over years and Elias Sabo said market is recovering slightly and they're well positioned for acquisitions.

Q: Joseph Reagor asked about Lugano's EBITDA flow-through and 5.11's store growth.

A: Patrick Maciariello said Lugano's strength from market and salon openings, and 5.11's retail strategy is test and learn.

Q: Randolph Binner asked about Lugano's EBITDA margin and salon openings.

A: Elias Sabo said operating leverage, wholesale revenue, and execution contributing to margin, and salons in Chicago with others to be announced.